MEDIATION ON THE UP - avoid arbitration and litigation

For a number of years mediation has been talked up as a way of avoiding costly arbitration and litigation. Courts are now adopting the same view and are prepared to penalise parties who refuse mediation without justifiable grounds. In the case of Dunnett v Railtrack a dispute was referred to the Court of Appeal where Railtrack were successful. The normal rule that the losing party pays the winners costs was expected to apply. Despite Railtrack’s success the Court of Appeal refused to order that Dunnett pay Railtrack’s costs as Railtrack had refused the offer of mediation.

The matter of a costs order was again the subject of a dispute in the case of Hurst v Leeming. Hurst was a partner in a firm of solicitors who fell out with his partners. The matter was referred to court and Hurst instructed Ian Leeming QC to represent him. The case failed in the Lower Court, The Court of Appeal and in The House of Lords. Hurst considered that Leeming had negligently handled his case and commenced an action in the High Court. Following advice from the judge the case was discontinued. Normally Hurst would have been left to pay Leeming’s costs but after the commencement of proceedings Hurst had invited Leeming to partake in mediation but this offer was refused. In view of the decision in the Railtrack dispute Hurst sought to have Leemings refusal of mediation to be taken into account. The judge however was persuaded that as Hurst had no real prospect of success this was justification for Leeming refusing to take part in mediation.

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